Summary A host of factors clearly signal a Republican takeover of the House. Although the battle for the Senate is closer, Republican candidates in key races have momentum and the GOP is well positioned to win the majority in the Senate. The baseline case is a Republican sweep. This note takes a final pre-election look at what to expect the election outcome(s) could mean for policy and markets.
If Republicans win, energy and defense could be the biggest sector winners.
A Republican win in the Senate could slow the Biden administration’s regulatory policy but probably not as much as some investors think.
If expectations are wrong and Democrats retain control of the House and Senate, markets might selloff.
CONTINUES AT BOTTOM
2- Goldman: The Old Economy Takes its Revenge
In this report at bottom, Goldman starts to lay out the implications of lower capex, depressed earnings, and tighter monetary policy on commodity supply. They come at their conclusion (Commodities will go up) from several complementary yet correlated angles. We want to focus on one tying all their concepts together: Low prices are not solving supply problems at all.
Low(ish) Commodity Prices Are Temporary
We have stated recently several times, Goldman is not backing off their Supercycle1 thesis despite retracements in most commodities during the Fed tightening. This report (at bottom) reaffirms that once again. We know why now. Supply remains too low in key commodities.
Key for them we feel2, and almost buried in the short report, but nevertheless a reappearing theme for a year is this: Shrinking money supply hides true commodity scarcity.
This is a linchpin of their sticking with the commodity Supercycle concept, as opposed to declaring it over with these 2022 retracements.
